Brexit and Britain's endless turmoil
As UK struggles with the complex process of how to end its membership in European Union, with the exit date of March 31 just a few days away, the nation is being torn apart by mindboggling uncertainties. For a nation with a historic reputation of common sense and pragmatism, it is an unbelievable crisis.
A fine political leader of charm, decency and integrity ascending towards a good legacy may be undone by one monumental mis-judgment. Today when the print media and airwaves are swept by the avalanche of news about Brexit, it is forgotten how the former Prime Minister David Cameron's one colossal gamble in 2016 plunged Britain into a turbulent uncertainty that would go on and on.
In 2016, as prime minister, he called a referendum on whether or not Britain would choose to leave or remain in the European Union. He campaigned hard and was confident that UK public would vote to remain in EU. It didn't happen, and Cameron resigned immediately. It was incredible that Britain would opt out (with a 52 percent majority) from an organisation where about half of its exports goes (The Economist, June 24, 2016).
The core sentiment behind those who voted "no" was a sense of injured populism. These people felt left out of the British prosperity. The weakness of EU economies, democratic deficit in Brussels, and the voters' worry and resentment over the free movement of people and the feeling that their jobs were being taken away by foreigners were key drivers.
The EU is an economic and political partnership underpinned by a central idea that nations trading together are unlikely to go to war. Indeed, the organisation has seen 50 years of unbroken peace. EU has become a single market. Goods and people move around as if EU is one country. Nineteen members use a single currency, the Euro. It has its own parliament and it now sets rules in a wide range of areas.
Article 50 gives the two sides two years to agree terms for terminating the link. The British Prime Minister Theresa May set the process in motion on March 29, 2017 which means that March 29 this year is the deadline. If terms of exit cannot be reached by that date, it will be a situation of no deal exit, something that creates almost universal concern.
A segment of MPs would rather have a no deal exit than rethink leaving. A statement made recently by Britain's Brexit Minister Mr Stephen Barkley says it all: "I think no deal is going to be very disruptive for the economy and I think no deal has serious questions for the union… But I think no Brexit is catastrophic for our democracy. Between those very unpleasant choices, I think no Brexit is a bigger risk."
On March 14, the British parliament solidly voted against (334/85 margin) delaying exit from EU so that a second referendum could be held. The chances of a second referendum look very slim. Britain is now staring down a murky path where there is no plan for an orderly withdrawal.
Those of us who have familiarity with the history and chaotic events associated with the 1947 partition of India, cannot but see a certain similarity between the two situations. Now as then, time is running out and the British government seems to be sleepwalking into an anarchic situation.
The deal that Theresa May reached with EU—but was twice voted down by British parliament—laid down that Britain owes USD 39 billion to EU. There will be a transition period of two years to work out details of the new relationship. Free movement will continue during this period up to December 31, 2020. Another question to be settled is what happens to the UK citizens living in EU and EU citizens living in Britain.
The pro-Brexit camp believe the 39-billion-pound separation bill will be redeemed by the advantage in Britain being able to strike beneficial trade deals around the world. With EU, Britain will trade under WTO rules.
One key issue over which both UK and EU are concerned is what is called Backstop, a soft border that keeps Britain and EU in a customs union. Once Brexit comes into effect, the 310-mile border between Northern Ireland and Ireland becomes border between UK and EU. Many MPs oppose the Backstop because it will keep Britain tied indefinitely with EU with no say over its rules and no flexibility for trade deals with other nations.
An impression has emerged that EU does not favour a soft Backstop with low tariffs and no customs desired by Britain. Their reason: it would be a gift to the smugglers.
It would seem that EU leaders have concluded that Theresa May has no longer the ability to pass a deal. They think a change of leadership in UK is likely, and they look to a new leader who will deliver a harder break.
Some comments on how a post-Brexit Britain could be affected are in order. There is a reasonably strong consensus that Brexit will leave UK in a weaker position in the European and global economy. Growth and employment creation will slow and income levels will be lower than they would have been otherwise. This is already evident from several companies relocating significant parts of their operations to central Europe and Ireland. There will be short disruption of economic activity from the sudden rise of uncertainty or logistical/administrative brakes imposed on the flow of goods at the border. Market panic could trigger selloff in the pound, equity markets or even UK government bonds.
A developing public movement in support of another referendum suggests that the national sentiment might be changing. Are the people having a clearer idea of what quitting EU means than they did in the first visceral flush of angry populism two years back when they voted to leave?
The possibilities that remain at this juncture are: i) A no deal exit; ii) Another referendum; iii) A general election (favoured by the Labour party); and iv) An extension of the deadline.
Rarely before has UK faced such a tense and agonising uncertainty.
Ziaus Shams Chowdhury is a former ambassador.
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